[number_cruncher_24]

Hi – I was wondering if someone could help me with an accounting question – here’s the scenario: Our fiscal year ends on May 31. We received a bill for our insurance policy on May 20. The bill is for insurance for the period of 6/15 through 12/15. We enter all bills into the system when received. When I enter this bill into the system, it will result in a credit to A/P but which account should be debited? It’s not an expense for the current fiscal year because it is for a future period, but we won’t pay it until after 5/31, so it’s not a prepaid yet either.

[jeff]

Plug the G/L to APIC and call it a day.

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Mayo]

Just debit a liability and credit a revenue. Gotta give the auditors something to do.

Mayo, BBA, Macc

[Mayo]

Just debit a liability and credit a revenue. Gotta give the auditors something to do.

Mayo, BBA, Macc

[Anonymous]

Good call Jeff.

One last comment and then I'm gonna do some actual work.

Someone somewhere along this discussion (not even sure who) mentioned that a prepaid couldn't be booked because the benefits had nothing to do with this period or some such nonsense. I would like to be the first to say WTF?!?!?! None of the prepaids on your B/S at year end benefit the current period. That is the whole concept of a prepaid. If it was for the current period, it would simply be called expense.

As to the specific accounting treatment, I'll say it like one of our partners says. “Just blow it through income.”

[Anonymous]

Good call Jeff.

One last comment and then I'm gonna do some actual work.

Someone somewhere along this discussion (not even sure who) mentioned that a prepaid couldn't be booked because the benefits had nothing to do with this period or some such nonsense. I would like to be the first to say WTF?!?!?! None of the prepaids on your B/S at year end benefit the current period. That is the whole concept of a prepaid. If it was for the current period, it would simply be called expense.

As to the specific accounting treatment, I'll say it like one of our partners says. “Just blow it through income.”

[LaxCPA]

Not that anyone will believe this but I am not also HerdCPA. I would not find the need to make a new anonymous name on an already anonymous forum. I also would not insult someone's job or professional opinion. I am sorry if it seemed that way I was just offering my opinion. Both positions are defensible, Admittedly I looked into it more last night and my position is not as concrete as I thought.

[LaxCPA]

Not that anyone will believe this but I am not also HerdCPA. I would not find the need to make a new anonymous name on an already anonymous forum. I also would not insult someone's job or professional opinion. I am sorry if it seemed that way I was just offering my opinion. Both positions are defensible, Admittedly I looked into it more last night and my position is not as concrete as I thought.

[Mayo]

I am also not LaxCPA or HerdCPA, or Jeff, or…..

Mayo, BBA, Macc

[Mayo]

I am also not LaxCPA or HerdCPA, or Jeff, or…..

Mayo, BBA, Macc

[jeff]

Lax and Herd are not the same person…I'm 97.4% sure.

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[jeff]

Lax and Herd are not the same person…I'm 97.4% sure.

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

Shouldn't a NINJA be able to see the ISP?

[Anonymous]

Shouldn't a NINJA be able to see the ISP?

[LaxCPA]

Thanks Jeff.

[LaxCPA]

Thanks Jeff.

[Author]

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